Published 7:00 pm, Thursday, May 20, 2010

The Woodlands Township board should give all taxpayers a break through a homestead exemption, not just the elderly and disabled.

After approving a $25,000 homestead exemption for the elderly and disabled in April, the board has been grappling with, but put off voting on, a 3 percent homestead exemption for residents. While the money saved by homeowners would be minimal, it is fair to give everyone a break.

The average value of a home in The Woodlands is $310,978. A 3 percent exemption would bring the taxable value down to $301,649. At the current property tax rate of 32.8 cents per $100 valuation, a homeowner of the average-valued home would save around $30 in annual Woodlands property taxes. While it’s not much, it is something.

It also would give Woodlands residents, as a whole, another $771,000 to spend in the community.

In order to accomplish the homestead exemption, board members must identify specific cuts in the 2010-11 budget to account for the loss in property tax revenue and commit to those cuts, then approve the homestead exemption by the July 1 deadline.

The township board was able to account for the property tax revenue lost in the senior and disabled homestead exemption through money saved on bond interest rates. The township had anticipated a 5.75 percent rate but was able to secure a 3.82 percent rate, saving an estimated $400,000 per year over the next 10 years, according to Monique Sharp, finance director for the township. However, all that savings was factored into the senior and disabled homestead exemption, Sharp said. That means the board must identify other costs to cut to account for the proposed 3 percent exemption for all residents.

The board also will have to find more cuts to ensure property taxes do not increase. According to Sharp, the five-year plan shows deficit spending of $667,000 in 2011, increasing to $1.95 million by 2014.

The board is considering the possibility of a property tax rate reduction for the upcoming budget year. Montgomery County Tax Assessor/Collector J.R. Moore said it could be 31.03 cents per $100 valuation in 2010-11 and still generate the same amount of property tax revenue as the current year, based on residential and commercial growth in the community.

To account for the proposed 3 percent homestead exemption, Moore said, the property tax rate would have to be 31.63 cents.

However, there would be no property tax break to residents through the exemption if the board accounts for the exemption by making it up in the property tax rate. The board would give back to residents with the exemption, but then take it right back away with the property tax adjustment.

The only way to account for the lost property tax revenue from the exemption is to cut spending. And with costs of contracted services to the township sure to increase, the board must find other areas to cut to keep the tax burden and spending flat, if not reduce it, while still granting the homestead exemption.